EMPLOYER GETS INDICTED FOR NO POACHING SENIOR EMPLOYEES AGREEMENTS WITH COMPETITORS

EMPLOYER GETS INDICTED FOR NO POACHING SENIOR EMPLOYEES AGREEMENTS WITH COMPETITORS

Employers rarely get entwined in antitrust actions, but that is exactly what happened on January 7th of this year.  The Department of Justice indicted Surgical Care Affiliates LLC, which operates outpatient medical care facilities throughout the country.  The indictment says that Surgical Care violated Section 1 of the Sherman Act by agreeing with competitors to not solicit senior-level employees from each other.  The Assistant Attorney General in charge said the government “will ensure that companies who illegally deprive employees of competitive opportunities are not immune from the antitrust laws,” making it clear that ‘no-poaching’ agreements are illegal.

Surgical’s CEO thought emails were private and confirmed in writings obtained by the government various agreements with competitor CEOs not to approach the other’s employees, not to recruit the other’s employees, and to only consider unsolicited senior executive employment inquiries if the competitor’s executive had already told the company they want to leave and were looking for a new job.

The company faces attention-getting fines of $100,000,000 or more.  The indictment shows that the government is keen on criminalizing anticompetitive hiring practices, not just no-poaching agreements.

Notably, when VP, President-Elect Joe Biden worked to eliminate non-compete and no-poach agreements, doing so intending to raise the living standards of middle-class families and to eliminate historical barriers keeping employees from being paid competitively.  The theory is that companies should have to compete for talent and be prohibited from tamping down wages by anti-competitive actions such as ‘no-poaching’ agreements.

For more information feel free to contact Dawn: dcoulson@eppscoulson.com.

 

EPPS & COULSON, LLP

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